Corporate Financial Reporting and Disclosure Practices in Ethiopia
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Date
2015-11
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Addis Ababa University
Abstract
This research aims to investigate the overall and detailed financial disclosure status of Ethiopian companies against the IAS/IFRS standards. For the sake of achieving the objectives of this study, the detailed disclosure index has been adopted and analyzed using descriptive statistical methods. The disclosure index filled from a sample of 75 banking, insurance and ECX member companies’ annual financial reports of 2013/2014 GC (2006 EC). These 75 annual financial reports were selected from 20% from each of the 19 banks, 17 insurance and 343 ECX member companies using a simple random sampling technique. The literature analysis outlined the role of various local and international standards and regulatory bodies into the status of financial disclosure practices in Ethiopia. Various empirical studies have also been analyzed at the developed, developing and Ethiopian contexts.
Therefore, the overall findings show that all the seventy five sampled companies have not fully complied with IAS/IFRS disclosure requirements. It is further indicated that the overall mean of 35.18% compliance score was very much lower than an average 56% compliance in the developing world (Gephardt and Heilman 2004). In addition, the study also revealed significant differences among the two selected industries in Ethiopia with significance difference levels of 0.26723 (t-test=6.533, P=0.000). Based on findings, recommendations to government bodies, the concerned companies and suggestions for other researchers are forwarded.
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Financial Reporting